In search of Act 69

Is the moment finally arriving when the slow drip torture of education taxes, financing and spending finally reach some sort of breaking point?

Word that the base education tax rate could jump by five cents or more, depending on whether we're talking about residential or non-residential tax rates, should be setting off alarm bells in Montpelier. They should also prompt some scrutiny down at the local level as well, as voters start gathering at town meetings early next week to discuss and debate local school district budgets. State officials like to say that education spending in Vermont is driven by local decisions. But it's a state law - Act 68 - which sets in place a statewide property tax and a financing mechanism that is so convoluted and distorted by carve-outs like the income sensitivity provision that the true cost of local decisions are virtually impossible to assess accurately, piecemeal, at town meetings.

It's no easy feat to even explain how the law works, even for those who get to enjoy hassling with concepts like coefficients of dispersion and common levels of appraisal.

Act 68 - and its precursor, Act 60 - has its merits and the system it replaced rectified the problem of less-affluent towns and school districts being placed at a sharp disadvantage to wealthier communities when it came to setting local tax rates and providing educational services for their school-age children. But if the base tax rate rises to the extent that has been widely projected, then it's time to declare the system broken and in need of revision. Sixteen years after the passage of Act 60, it's time to come up with an alternative that reflects the changes in education since 1997.

Foremost among those changes is the well-established and well-known phenomenon of a shrinking number of K-12 students statewide, side-by-side with a paradoxical rise in education spending. We understand those two things need not necessarily move in lock step. Unlike a private business, schools can't always trim the size of their staffs to be perfectly in line with school enrollments. But at some point, those two trends have to start approximating each other. It doesn't make sense to go on like that year after year. Throw in one of the lowest student-teacher ratios in the country - if not the lowest - and you have a situation that calls out for change. It's unsustainable, to use that overworked phrase.

We're not blaming educators for this and we are well aware and highly supportive of the important role education plays in personal development, community cohesion and economic opportunity. The purpose of re-thinking and reformulating Act 60/68 is to hold onto the relatively strong educational delivery of services currently in place at a cost taxpayers and the state as a whole can afford.

Plain and simple, a base tax rate jump of between five and nine cents isn't affordable.

We also recognize that many lower-income Vermonters are shielded from the full impact of such increases by the income sensitivity provisions. But there are two downsides to that. One, the majority of voters don't get a real sense of what the decisions they are making on school budgets actually cost, which are difficult for many to understand and fully absorb, particularly in a setting like town meeting. Education costs are spread out so widely that they in effect become someone else's problem. That leads to the second problem - by minimizing the financial impact on folks making $75,000 or less, we place a disproportionate share on commercial property (businesses, often small businesses), second-home owners and the well-to-do. You can argue that those fortunate to be in the latter category should pay disproportionately more, but there's a limit to everything. The record on how much tax policy has to do with determining states of residence may be mixed and complicated, but it shouldn't be shrugged off as irrelevant either.

With everything else it has going on at the moment, an overhaul of Act 68 isn't going to happen this year, but voters do have a chance to take the first step and ask questions at their upcoming town meetings. A rural state like Vermont will probably be doomed to spending more per capita than a more urban one, but that doesn't mean we're helpless either. Thoughtful consolidation of school districts, which finally - finally - seem to be gaining some small traction are one place to keep moving on, as are other cost saving measures like long distance learning and exploiting technology more effectively. A clear no-brainer is eliminating the small schools grant. While that by itself may not be a gamechanger money-wise, it is one tangible step that could force schools too small to be viable to ramp up their efforts to combine into larger districts.

Meanwhile, Gov. Shumlin's idea about expanding pre-K education for more Vermont families is a good one, but it won't fly under the present funding formula. That's a shame, because we'd agree with the premise that for many youngsters, beginning their education prior to the traditional start of Kindergarten makes sense. Unfortunately, Gov. Shumlin's proposed funding source - using money from the state's earned income credit - isn't the answer either.

The pre-K piece is one more example of why the way we fund education here in the state is up for review. It should happen, but it can't, because the shell game of moving money around, and robbing Peter to pay Paul has also reached its limits.

A five cent increase in the base education tax rate should be considered unacceptable, and voters should make that clear at town meetings to school directors and officials, even though they are not the ones to blame for bringing you this. Legislators should be left in no doubt that something is broken here and needs fixing.


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